Swiss Private Banking Jobs Said To Be Threatened By EU Regulatory Juggernaut

Tom Burroughes

30 September 2013

As many as 7,000 Swiss private banking jobs could be lost if European Union regulations supposedly designed to protect investors and boost competition go ahead as planned, the Financial Times quotes the Swiss Bankers Association as warning.

A total of 105,166 people worked in Swiss banking, according to the SBA website, at the end of last year. That was a fall of 2.7 per cent from the previous year.

The SBA says job cuts are inevitable if the proposals, which would force Swiss banks to set up branches or subsidiaries in the EU to access onshore clients, are approved. The proposals are contained within the revised Markets in Financial Instruments Directive – or “MiFID”.

Stefan Hoffmann, head of European affairs at the SBA, was quoted by the FT as saying that large private banks will be able to adapt to the requirements, but small and medium-sized players lack the financial means to establish an onshore presence. Smaller banks will be cut off from an estimated SFr1.0 trillion ($1.1 trillion) of assets handled by Swiss private banks for EU-based private clients.

“Large banks are solving the problem at a high cost by setting up subsidiaries or branches in Europe, but that option is not open to small banks. A real danger is that they will have to close down,” he is quoted as having said.

Earlier in September, the SBA flagged up the issue in a speech delivered to its members in Zurich by Claude-Alain Margelisch, the SBA’s chief executive. He said: "We must try to find a satisfactory solution to the implementation of MiFID II, even if it requires a services agreement with the EU in the mid-term.” The proposed European MiFID II directive threatens even greater discrimination against third countries, and hence banks in Switzerland, when it comes to access to the key EU market, he noted.

The proposed revisions to MiFID come at a time when Swiss banking, home to an estimated SFr5.56 trillion of assets in total, faces growing pressure against the Alpine state’s historic bank secrecy legislation. Switzerland also has dozens of small-size private banks; an issue is whether some of them can cope with a rising compliance burden. To do so, some will have to merge with others, some commentators say, or change their status. Out of the SFr5.56 trillion figure of assets, about half of that sum is run for foreigners, according to the SBA website.